tag:blogger.com,1999:blog-11255170Sun, 02 Aug 2015 19:38:26 +0000EconomicsLinksMonetary PolicyPoliticsFed WatchIncome DistributionBudget DeficitFinancial SystemFiscal PolicyUnemploymentSocial InsuranceRegulationMethodologyMacroeconomicsMarket FailureInflationInternational FinanceVideoConferencesFiscal TimesTaxesTechnologyWeblogsEconometricsPressAcademic PapersChinaHealth CareHousingImmigrationPolicySocial SecurityFed SpeechesIraqSavingUnionsDevelopmentEquityInternational TradeUniversitiesBack-Up Site for Economist's Viewhttp://economistsview.blogspot.com/noreply@blogger.com (Mark Thoma)Blogger4326125tag:blogger.com,1999:blog-11255170.post-879315377603492353Wed, 29 Jan 2014 08:30:00 +00002014-02-04T23:46:54.913-08:00EconomicsLinksLinks for 01-29-2014<ul>
<li><a data-mce-href="http://www.nytimes.com/2014/01/29/business/economy/confronting-old-problem-may-require-a-new-deal.html?partner=rss&amp;emc=rss" href="http://www.nytimes.com/2014/01/29/business/economy/confronting-old-problem-may-require-a-new-deal.html?partner=rss&amp;emc=rss">Confronting Old Problem May Require a New Deal - NYTimes.com</a></li>
<li><a data-mce-href="http://krugman.blogs.nytimes.com/2014/01/28/kocherlakota-and-the-cultists/" href="http://krugman.blogs.nytimes.com/2014/01/28/kocherlakota-and-the-cultists/">Kocherlakota and the Cultists - Paul Krugman</a></li>
<li><a data-mce-href="http://equitablegrowth.org/2014/01/28/1826/afternoon-must-read-mark-thoma-sharing-the-gains-from-economic-growth" href="http://equitablegrowth.org/2014/01/28/1826/afternoon-must-read-mark-thoma-sharing-the-gains-from-economic-growth">Afternoon Must-Read - Brad DeLong</a></li>
<li><a data-mce-href="http://www.voxeu.org/article/inequality-and-household-debt-new-evidence" href="http://www.voxeu.org/article/inequality-and-household-debt-new-evidence">Inequality and household debt - vox</a></li>
<li><a data-mce-href="http://www.economist.com/blogs/freeexchange/2014/01/minimum-wage-and-state-microeconomics" href="http://www.economist.com/blogs/freeexchange/2014/01/minimum-wage-and-state-microeconomics">No, micro is not the "good" economics - The Economist</a></li>
<li><a data-mce-href="http://econbrowser.com/archives/2014/01/the-reliability-of-chinese-gdp-again" href="http://econbrowser.com/archives/2014/01/the-reliability-of-chinese-gdp-again">The Reliability of Chinese GDP, Again - Econbrowser</a></li>
<li><a data-mce-href="http://newmonetarism.blogspot.com/2014/01/whats-central-bank-good-for.html" href="http://newmonetarism.blogspot.com/2014/01/whats-central-bank-good-for.html">What's a Central Bank Good For? - Stephen Williamson</a></li>
<li><a data-mce-href="http://longandvariable.wordpress.com/2014/01/28/why-both-kydland-prescott-and-sims-got-the-nobel-and-why-it-isnt-weird/" href="http://longandvariable.wordpress.com/2014/01/28/why-both-kydland-prescott-and-sims-got-the-nobel-and-why-it-isnt-weird/">Why Kydland, Prescott and Sims got the Nobel - longandvariable</a></li>
<li><a data-mce-href="http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/01/is-the-falling-exchange-rate-good-news-or-bad-news.html" href="http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/01/is-the-falling-exchange-rate-good-news-or-bad-news.html">"Is the falling exchange rate good news or bad news?" - Nick Rowe</a></li>
<li><a data-mce-href="http://www.bruegel.org/nc/blog/detail/article/1232-blogs-review-more-inequality-same-mobility/" href="http://www.bruegel.org/nc/blog/detail/article/1232-blogs-review-more-inequality-same-mobility/">Blogs review: More inequality, same mobility - Jérémie Cohen-Setton</a></li>
<li><a data-mce-href="http://economix.blogs.nytimes.com/2014/01/28/challenges-for-the-yellen-fed/" href="http://economix.blogs.nytimes.com/2014/01/28/challenges-for-the-yellen-fed/">Challenges for the Yellen Fed - NYTimes.com</a></li>
<li><a data-mce-href="http://www.voxeu.org/article/us-electrification-1930s" href="http://www.voxeu.org/article/us-electrification-1930s">US electrification in the 1930s - vox</a></li>
<li><a data-mce-href="http://krugman.blogs.nytimes.com/2014/01/28/prisoner-of-the-green-room/?_php=true&amp;_type=blogs&amp;_r=0" href="http://krugman.blogs.nytimes.com/2014/01/28/prisoner-of-the-green-room/?_php=true&amp;_type=blogs&amp;_r=0">Prisoner of the Green Room - Paul Krugman</a></li>
<li><a data-mce-href="http://www.digitopoly.org/2014/01/28/it-begins-evolving-the-bloggingjournalism-space/" href="http://www.digitopoly.org/2014/01/28/it-begins-evolving-the-bloggingjournalism-space/">It begins: evolving the blogging/journalism space - Digitopoly</a></li>
<li><a data-mce-href="http://www.interfluidity.com/v2/4979.html" href="http://www.interfluidity.com/v2/4979.html">Pro-family, pro-children, anti-”marriage promotion” - interfluidity</a></li>
</ul>
http://economistsview.blogspot.com/2014/01/links-for-01-29-2014.htmlnoreply@blogger.com (Mark Thoma)1tag:blogger.com,1999:blog-11255170.post-841502738677526068Tue, 28 Jan 2014 10:00:00 +00002014-02-04T23:45:54.962-08:00EconomicsIncome Distribution'Money and Class'Paul Krugman:<br />
<blockquote>
<a data-mce-href="http://krugman.blogs.nytimes.com/2014/01/28/money-and-class/" href="http://krugman.blogs.nytimes.com/2014/01/28/money-and-class/" target="_self">Money and Class</a>: My post on Americans <a data-mce-href="http://krugman.blogs.nytimes.com/2014/01/27/the-realities-of-class-begin-to-sink-in/?module=BlogPost-Title&amp;version=Blog%20Main&amp;contentCollection=Opinion&amp;action=Click&amp;pgtype=Blogs&amp;region=Body" href="http://krugman.blogs.nytimes.com/2014/01/27/the-realities-of-class-begin-to-sink-in/?module=BlogPost-Title&amp;version=Blog%20Main&amp;contentCollection=Opinion&amp;action=Click&amp;pgtype=Blogs&amp;region=Body"> starting to recognize class realities</a>
has brought some predictable reactions, which I’d place under two
headings: (1) “But they have cell phones!” and (2) it’s about how you
behave, not how much money you have.<br />
My answer to both of these
would be to say that when we talk about being middle class, I’d argue
that we have two crucial attributes of that status in mind: security and
opportunity.<br />
By security, I mean that you have enough resources
and backup that the ordinary emergencies of life won’t plunge you into
the abyss. This means having decent health insurance, reasonably stable
employment, and enough financial assets that having to replace your car
or your boiler isn’t a crisis.<br />
By opportunity I mainly mean being
able to get your children a good education and access to job prospects,
not feeling that doors are shut because you just can’t afford to do the
right thing.<br />
If you don’t have these things, I would say that you
don’t lead a middle-class life, even if you have a car and a few
electronic gadgets that weren’t around during the era when most
Americans really were middle class, and no matter how clean, sober, and
prudent your behavior may be. ...<br />
A lot of Americans — quite
arguably a majority — just don’t have the prerequisites for middle-class
life as we’ve always understood it. ...<br />
The sad thing is that our
fetishization of the middle class, our pretense that we’re almost all
members of that class, is a major reason so many of us actually aren’t.
That’s why the growing appreciation of class realities on the part of
the public is a good thing; it raises the chances that we’ll actually
start creating the kind of society we only pretend to have.</blockquote>
I've written about this in the past, e.g. in 2010:<br />
<blockquote>
...people
who, because of their incomes, cannot participate fully in society are
poor. A child getting enough to eat, and with clothes to wear, who
cannot afford the toys needed to be part of the group of kids in the
neighborhood is socially isolated and socially disadvantaged (we don't
want to play at your house because you don't have a TV, you can't come
with us because you don't have a bike, you didn't get my text message
about baseball practice being moved?, etc., etc., etc.). Giving people,
children in particular, what they need to participate in the society
around them is an important element of how successful they will be in
the future. It helps to determine their ability to give back to society
as fully participating adults. ...</blockquote>
Or, from 2008:<br />
<blockquote>
To
me, being poor isn't just about stuff, it's about being able to
participate fully in society. The things on the list that almost all
households now have, refrigerators, stoves, TVs, and telephones, are
things you have to have to function in this society... How do you make a
doctor's appointment without a phone? Drop by in you spare time? A
refrigerator and a stove are items a household has to have given how we
bring food to the table in this society. I just don't see these things
as doing anything more than providing the minimum necessary to function.
Even something like a TV is necessary if you want to, say, keep up with
the political debates (there's a presumption in our political discourse
that you can watch campaigns on television and they are largely devoted
to delivery over that medium - without a TV you cannot participate
fully) or even talk to people around the water-cooler at work about the
latest popular TV show. Yes, the poor might have been well-off in, say,
1821 given the societal standards of the time, or some other historical
period one might choose to compare, but this isn't 1821 - things have
changed and so have the minimum standards necessary to be part of the
society. I'm sorry if there are people who don't want to share... Giving
people the things they need to be a full part of the society they live
in is the decent and right thing to do. As our society elevates itself
and the requirements for full participation increase, when things like
computers are as necessary as a stove, our standards of decency - what
we are willing to accept as a minimum standard of living - must also
rise. Just meeting physical needs - food and clothing - is not enough to
be a full part of the society we live in today. We can and should do
better than that.</blockquote>
http://economistsview.blogspot.com/2014/01/money-and-class.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-3528249692482866235Tue, 28 Jan 2014 09:00:00 +00002014-02-04T23:44:44.556-08:00EconomicsFiscal TimesIncome DistributionSharing the Gains from Economic GrowthI have a new column on inequality:<br />
<blockquote>
<a data-mce-href="http://www.thefiscaltimes.com/Columns/2014/01/28/Sharing-Gains-Economic-Growth" href="http://www.thefiscaltimes.com/Columns/2014/01/28/Sharing-Gains-Economic-Growth"> Sharing the Gains from Economic Growth, by Mark Thoma</a>:
President Obama will make reducing inequality a major part of his State
of the Union Address according to several reports. But to avoid being
accused of waging class warfare, <a data-mce-href="http://abcnews.go.com/Politics/wireStory/obama-focus-opportunity-inequality-21658250" href="http://abcnews.go.com/Politics/wireStory/obama-focus-opportunity-inequality-21658250"> he will talk about</a> creating “ladders of opportunity” instead of focusing directly on the inequality problem.</blockquote>
<blockquote>
This shift in emphasis is a mistake because it misses a key part of the inequality problem. ...</blockquote>
The mechanism that distributes goods and services is broken.http://economistsview.blogspot.com/2014/01/sharing-gains-from-economic-growth.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-6887404886274547148Tue, 28 Jan 2014 08:30:00 +00002014-02-04T23:43:37.401-08:00EconomicsLinksLinks for 01-28-2014<ul>
<li><a data-mce-href="http://krugman.blogs.nytimes.com/2014/01/27/soup-kitchens-caused-the-great-depression-aff-edition/" href="http://krugman.blogs.nytimes.com/2014/01/27/soup-kitchens-caused-the-great-depression-aff-edition/">Soup Kitchens Caused the Great Depression, AFF Edition - Paul Krugman</a></li>
<li><a data-mce-href="http://www.motherjones.com/kevin-drum/2014/01/no-decline-cinderalla-marriages-probably-hasnt-played-big-role-rising-income-ineq" href="http://www.motherjones.com/kevin-drum/2014/01/no-decline-cinderalla-marriages-probably-hasnt-played-big-role-rising-income-ineq">Decline of Cinderalla Marriages Doesn't Explain Rising Inequality - Kevin Drum</a></li>
<li><a data-mce-href="http://www.thedemocraticstrategist.org/strategist/2014/01/baker_fiscal_policy_the_long-t.php" href="http://www.thedemocraticstrategist.org/strategist/2014/01/baker_fiscal_policy_the_long-t.php">Fiscal Policy, the Long-Term Budget, and Inequality - Dean Baker</a></li>
<li><a data-mce-href="http://www.epi.org/blog/tight-link-minimum-wage-wage-inequality/" href="http://www.epi.org/blog/tight-link-minimum-wage-wage-inequality/">The Tight Link Between the Minimum Wage and Wage Inequality - EPI</a></li>
<li><a data-mce-href="http://noahpinionblog.blogspot.com/2014/01/the-econ-nobel-prize-is-really-weird.html" href="http://noahpinionblog.blogspot.com/2014/01/the-econ-nobel-prize-is-really-weird.html">The Econ Nobel Prize is really weird - Noahpinion</a></li>
<li><a data-mce-href="http://economix.blogs.nytimes.com/2014/01/27/qa-an-advocate-for-a-quicker-taper/" href="http://economix.blogs.nytimes.com/2014/01/27/qa-an-advocate-for-a-quicker-taper/">Q&amp;A: An Advocate for a Quicker Taper - NYTimes.com</a></li>
<li><a data-mce-href="http://economix.blogs.nytimes.com/2014/01/27/qa-a-voice-for-an-activist-fed/" href="http://economix.blogs.nytimes.com/2014/01/27/qa-a-voice-for-an-activist-fed/">Q&amp;A: A Voice for an Activist Fed - NYTimes.com</a></li>
<li><a data-mce-href="http://nymag.com/daily/intelligencer/2014/01/obama-hire-the-long-term-unemployed.html?mid=rss" href="http://nymag.com/daily/intelligencer/2014/01/obama-hire-the-long-term-unemployed.html?mid=rss">Obama: Hire the Long-term Unemployed - Jon Chait</a></li>
<li><a data-mce-href="http://krugman.blogs.nytimes.com/2014/01/27/the-realities-of-class-begin-to-sink-in/" href="http://krugman.blogs.nytimes.com/2014/01/27/the-realities-of-class-begin-to-sink-in/">The Realities of Class Begin To Sink In - Paul Krugman</a></li>
<li><a data-mce-href="http://equitablegrowth.org/2014/01/27/1803/a-better-headline-would-be-mobility-stagnant-as-u-s-economy-doubles" href="http://equitablegrowth.org/2014/01/27/1803/a-better-headline-would-be-mobility-stagnant-as-u-s-economy-doubles">“Mobility Stagnant as U.S. Economy Doubles” - WCEG</a></li>
<li><a data-mce-href="http://www.nybooks.com/articles/archives/2014/feb/06/our-dangerous-budget-and-what-do-about-it/" href="http://www.nybooks.com/articles/archives/2014/feb/06/our-dangerous-budget-and-what-do-about-it/">Our Dangerous Budget and What to Do About It - Jeffrey D. Sachs</a></li>
<li><a data-mce-href="http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2014/01/taxes-growth.html" href="http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2014/01/taxes-growth.html">Taxes &amp; growth - Chris Dillow</a></li>
<li><a data-mce-href="http://baselinescenario.com/2014/01/27/all-you-need-for-a-financial-crisis/" href="http://baselinescenario.com/2014/01/27/all-you-need-for-a-financial-crisis/">“All You Need for a Financial Crisis . . . - The Baseline Scenario</a></li>
<li><a data-mce-href="http://web.mit.edu/newsoffice/2014/how-the-matthew-effect-helps-some-scientific-papers-gain-popularity-0127.html" href="http://web.mit.edu/newsoffice/2014/how-the-matthew-effect-helps-some-scientific-papers-gain-popularity-0127.html">The ‘Matthew Effect’ helps some scientific papers - MIT News</a></li>
<li><a data-mce-href="http://web.mit.edu/newsoffice/2014/when-the-job-search-becomes-a-blame-game-0127.html" href="http://web.mit.edu/newsoffice/2014/when-the-job-search-becomes-a-blame-game-0127.html">When the job search becomes a blame game - MIT News</a></li>
<li><a data-mce-href="http://noahpinionblog.blogspot.com/2014/01/chris-house-sticks-up-for-macro-part-ii.html" href="http://noahpinionblog.blogspot.com/2014/01/chris-house-sticks-up-for-macro-part-ii.html">Chris House sticks up for macro, part II - Noahpinion</a></li>
<li><a data-mce-href="http://economix.blogs.nytimes.com/2014/01/27/profits-up-wages-down-what-economics-has-to-say/?_php=true&amp;_type=blogs&amp;_r=0" href="http://economix.blogs.nytimes.com/2014/01/27/profits-up-wages-down-what-economics-has-to-say/?_php=true&amp;_type=blogs&amp;_r=0">Profits Up, Wages Down: What Economics Has to Say - NYTimes.com</a></li>
<li><a data-mce-href="http://blogs.worldbank.org/allaboutfinance/deposit-insurance-and-global-financial-crisis" href="http://blogs.worldbank.org/allaboutfinance/deposit-insurance-and-global-financial-crisis">Deposit Insurance and the Global Financial Crisis - All About Finance</a></li>
<li><a data-mce-href="http://acemaxx-analytics-dispinar.blogspot.ch/2014/01/interview-prof.html" href="http://acemaxx-analytics-dispinar.blogspot.ch/2014/01/interview-prof.html">Interview: Prof. Richard Grossman, Wesleyan - acemaxx-analytics</a></li>
<li><a data-mce-href="http://economix.blogs.nytimes.com/2014/01/27/the-business-of-paid-family-leave/" href="http://economix.blogs.nytimes.com/2014/01/27/the-business-of-paid-family-leave/">The Business of Paid Family Leave - Nancy Folbre</a></li>
</ul>
http://economistsview.blogspot.com/2014/01/links-for-01-28-2014.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-7920129833292964429Mon, 27 Jan 2014 22:31:00 +00002014-01-27T14:31:04.078-08:00EconomicsPoliticsUnemployment'Obama’s Plan to End Discrimination Against the Long-term Unemployed'Do you think this will work? I have my doubts:<br />
<blockquote>
<a data-mce-href="http://nymag.com/daily/intelligencer/2014/01/obama-hire-the-long-term-unemployed.html" href="http://nymag.com/daily/intelligencer/2014/01/obama-hire-the-long-term-unemployed.html"> Obama’s Plan to End Discrimination Against the Long-term Unemployed, by Jonathan Chait</a>:
In his State of the Union address tomorrow night, President Obama will
announce that some of the largest firms in the United States have signed
a pledge not to discriminate in hiring against the long-term
unemployed, reports <a data-mce-href="http://online.wsj.com/news/articles/SB10001424052702303277704579345163039263136?mod=WSJ_Election_MIDDLETopStories" href="http://online.wsj.com/news/articles/SB10001424052702303277704579345163039263136?mod=WSJ_Election_MIDDLETopStories"> The Wall Street Journal</a>. ...</blockquote>
<blockquote>
Employers
are simply using long-term unemployment as a heuristic, to weed out
what they see as the weakest candidates. But this shortcut traps the
unemployed in a cycle they cannot escape: The longer they’re unemployed,
the progressively harder it becomes to acquire a job. ...</blockquote>
<blockquote>
What
Obama is trying to do in the State of the Union speech is to create a
new kind of social norm in hiring. He’s arguing that employers should
not let themselves use this kind of shortcut, and that more careful
consideration can actually open up a wider pool of available talent. The
administration has boiled down its recommendations to a <a data-mce-href="http://online.wsj.com/public/resources/documents/bestpractices01262014.pdf" href="http://online.wsj.com/public/resources/documents/bestpractices01262014.pdf"> series of best practices</a> to avoid this form of discrimination.&nbsp; ...</blockquote>
<blockquote>
This
isn’t going to revolutionize the job market. And it’s not as good as
getting Congress to pass, say, a new infrastructure bill. But
discrimination against the long-term unemployed is a kind of cultural
problem in and of itself. And precisely, because it is a cultural
problem, it’s the sort of thing a high-profile speech combined with
concerted jawboning with corporate leaders has a hope of actually
changing.</blockquote>
http://economistsview.blogspot.com/2014/01/obamas-plan-to-end-discrimination.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-8389560320018760780Mon, 27 Jan 2014 17:12:00 +00002014-01-27T09:12:05.305-08:00EconomicsIncome DistributionDreaming of a Better GiniAt MoneyWatch:<br />
<blockquote>
<a data-mce-href="http://www.cbsnews.com/news/dreaming-of-a-better-gini/" href="http://www.cbsnews.com/news/dreaming-of-a-better-gini/" target="_self">How do we know if income inequality is getting worse? - Mark Thoma</a></blockquote>
I guess the editors didn't like my Dream of Gini title.http://economistsview.blogspot.com/2014/01/dreaming-of-better-gini.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-5597766484231234775Mon, 27 Jan 2014 09:30:00 +00002014-01-27T09:11:13.861-08:00EconomicsPaul Krugman: Paranoia of the PlutocratsWelcoming the hatred:<br />
<blockquote>
<a data-mce-href="http://www.nytimes.com/2014/01/27/opinion/krugman-paranoia-of-the-plutocrats.html" href="http://www.nytimes.com/2014/01/27/opinion/krugman-paranoia-of-the-plutocrats.html"> Paranoia of the Plutocrats, by Paul Krugman, Commentary, NY Times</a>: ...billionaire investor Tom Perkins... in a <a data-mce-href="http://online.wsj.com/news/articles/SB10001424052702304549504579316913982034286" href="http://online.wsj.com/news/articles/SB10001424052702304549504579316913982034286"> letter to the editor</a>
of The Wall Street Journal,... lamented public criticism of the “one
percent” — and compared such criticism to Nazi attacks on the Jews,
suggesting that we are on the road to another Kristallnacht.</blockquote>
<blockquote>
You
may say that this is just one crazy guy and wonder why The Journal
would publish such a thing. But Mr. Perkins isn’t that much of an
outlier...</blockquote>
<blockquote>
Now, just to be clear, the very rich,
and those on Wall Street in particular, are in fact doing worse under
Mr. Obama than they would have if Mitt Romney had won in 2012. ...</blockquote>
<blockquote>
But
every group finds itself ... on the losing side of policy disputes
somewhere along the way; that’s democracy. The question is what happens
next. Normal people take it in stride..., they don’t cry persecution,
compare their critics to Nazis and insist that the world revolves around
their hurt feelings. But the rich are different from you and me. ...
They’re accustomed to being treated with deference, not just by the
people they hire but by politicians who want their campaign
contributions. And so they are shocked to discover that money can’t buy
everything, can’t insulate them from all adversity.</blockquote>
<blockquote>
I
also suspect that today’s Masters of the Universe are insecure about
the nature of their success. We’re not talking captains of industry
here, men who make stuff. We are, instead, talking about
wheeler-dealers, men who push money around and get rich by skimming some
off the top as it sloshes by. They may boast that they are job
creators..., but are they really adding value? Many of us doubt it — and
so, I suspect, do some of the wealthy themselves, a form of self-doubt
that causes them to lash out even more furiously at their critics.</blockquote>
<blockquote>
Anyway,
we’ve been here before. It’s impossible to read screeds like those of
Mr. Perkins ... without thinking of F.D.R.’s famous 1936 Madison Square
Garden <a data-mce-href="http://www.presidency.ucsb.edu/ws/?pid=15219" href="http://www.presidency.ucsb.edu/ws/?pid=15219">speech</a>, in which he spoke of the hatred he faced from the forces of “organized money,” and declared, “I welcome their hatred.”</blockquote>
<blockquote>
President
Obama has not, unfortunately, done nearly as much as F.D.R. to earn the
hatred of the undeserving rich. But he has done more than many
progressives give him credit for — and like F.D.R., both he and
progressives in general should welcome that hatred, because it’s a sign
that they’re doing something right.</blockquote>
http://economistsview.blogspot.com/2014/01/paul-krugman-paranoia-of-plutocrats.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-7986127975073405128Mon, 27 Jan 2014 09:00:00 +00002014-01-27T09:10:00.878-08:00EconomicsPoliticsPress'A Tea Party Knight Is Out'David Warsh wonders if the WSJ is "changing things somewhat in the orientation of its editorial board":<br />
<blockquote>
<a data-mce-href="http://www.economicprincipals.com/issues/2014.01.26/1571.html" href="http://www.economicprincipals.com/issues/2014.01.26/1571.html">A Tea Party Knight Is Out, by David Warsh</a>: News, goes an old saw, is what happens near an editor. That’s what commenced last September when <em>Wall Street Journal</em> editors got hung up in lane closings at the George Washington Bridge. </blockquote>
<blockquote>
Whoever
they were, the editors passed along their displeasure and, perhaps,
suspicions to the paper’s transportation reporter, Ted Mann. After a
month of working the phones, Mann broached the possibility that the
tie-up was deliberate, with a story on October 2: <a data-mce-href="http://online.wsj.com/news/articles/SB10001424052702304373104579109860563887326" href="http://online.wsj.com/news/articles/SB10001424052702304373104579109860563887326"> Port Chief Fumed Over Bridge Jam/Patrick Foyle Fired Off an Email Message after Learning of Lane Closure</a>..., it was clearly the <em>WSJ</em> that first put Gov. Christie in play. ... </blockquote>
<blockquote>
Aggressive <em>WSJ</em>
reporting on a frontrunner for the next Republican Party presidential
nomination is evidence that Rupert Murdoch hasn’t monkeyed with the
longstanding culture of the news pages. ... </blockquote>
<blockquote>
I mention it here
because ... Murdoch may have an interest in changing things somewhat in
the orientation of its editorial board. I refer to the departure of <a data-mce-href="http://en.wikipedia.org/wiki/Stephen_Moore_(economist%2529" href="http://en.wikipedia.org/wiki/Stephen_Moore_%28economist%2529">Stephen Moore</a> to the Heritage Foundation. </blockquote>
<blockquote>
Moore
was the board’s chief economic commentator, a founder of the Club for
Growth, enthusiast of Tea Party ideals, possessor of a master’s degree
from George Mason University and a disciple of Arthur Laffer and Julian
Simon. ... </blockquote>
<blockquote>
The <em>WSJ</em> editorial page is a position of
enormous influence... Depending on how Moore is replaced, the
opportunity exists for Murdoch’s paper to play a constructive role... –
perhaps even to modulate the spirit of intransigence that dates back to
1972, when editor <a data-mce-href="http://www.economicprincipals.com/issues/2003.12.14/75.html" href="http://www.economicprincipals.com/issues/2003.12.14/75.html">Robert Bartley</a> and <a data-mce-href="http://www.economicprincipals.com/issues/2005.09.04/164.html" href="http://www.economicprincipals.com/issues/2005.09.04/164.html">Jude Wanniski</a> initiated a new era of political economic discourse in US politics. </blockquote>
<blockquote>
It
was Bartley’s unrelenting attacks on Bill Clinton in the 1990s that
established the predicate that presidents who are Democrats not only
have bad politics, but are not legitimate. Much of the present-day
animosity toward Obama got its start with Bartley’s over-the-top
opposition to Clinton. ... </blockquote>
<blockquote>
I plan to pay much closer attention to the editorial page of the <em>WSJ</em> in the months to come. Something is going on there.</blockquote>
http://economistsview.blogspot.com/2014/01/a-tea-party-knight-is-out.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-2291399198122824029Mon, 27 Jan 2014 08:30:00 +00002014-01-27T09:07:37.804-08:00EconomicsLinksLinks for 01-27-2014<ul>
<li><a data-mce-href="http://mainlymacro.blogspot.com/2014/01/bullard-on-death-of-theory.html" href="http://mainlymacro.blogspot.com/2014/01/bullard-on-death-of-theory.html">Bullard on the 'Death of a Theory' - mainly macro</a></li>
<li><a data-mce-href="http://rogerfarmerblog.blogspot.com/2014/01/old-keynesian-economics-and-equilibrium.html" href="http://rogerfarmerblog.blogspot.com/2014/01/old-keynesian-economics-and-equilibrium.html">Old Keynesian Economics and Equilibrium Theory - Roger Farmer</a></li>
<li><a data-mce-href="http://content.ksg.harvard.edu/blog/jeff_frankels_weblog/2014/01/26/recent-%e2%80%9cu-turns%e2%80%9d-in-central-banks%e2%80%99-forward-guidance-were-avoidable/" href="http://content.ksg.harvard.edu/blog/jeff_frankels_weblog/2014/01/26/recent-%e2%80%9cu-turns%e2%80%9d-in-central-banks%e2%80%99-forward-guidance-were-avoidable/">Recent “U-turns” in Forward Guidance Were Avoidable - Jeff Frankel</a></li>
<li><a data-mce-href="http://uneasymoney.com/2014/01/26/two-cheers-well-maybe-only-one-and-a-half-for-falsificationism/" href="http://uneasymoney.com/2014/01/26/two-cheers-well-maybe-only-one-and-a-half-for-falsificationism/">Two Cheers (Maybe One and a Half) for Falsificationism - Uneasy Money</a></li>
<li><a data-mce-href="http://www.washingtonpost.com/blogs/the-switch/wp/2014/01/25/what-the-humble-loom-can-teach-us-about-robots-and-automation/" href="http://www.washingtonpost.com/blogs/the-switch/wp/2014/01/25/what-the-humble-loom-can-teach-us-about-robots-and-automation/">Will robots steal our jobs? The humble loom suggests not. - James Bessen</a></li>
<li><a data-mce-href="http://understandingsociety.blogspot.com/2014/01/the-historian-and-archives.html" href="http://understandingsociety.blogspot.com/2014/01/the-historian-and-archives.html">The historian and the archives - Understanding Society</a></li>
<li><a data-mce-href="http://newmonetarism.blogspot.com/2014/01/ben-bernankes-legacy.html" href="http://newmonetarism.blogspot.com/2014/01/ben-bernankes-legacy.html">Ben Bernanke's Legacy - Stephen Williamson</a></li>
<li><a data-mce-href="http://orderstatistic.wordpress.com/2014/01/26/puzzles-progress-and-the-scientific-method/" href="http://orderstatistic.wordpress.com/2014/01/26/puzzles-progress-and-the-scientific-method/">Puzzles, Progress and the Scientific Method - Orderstatistic</a></li>
<li><a data-mce-href="http://blogs.ft.com/gavyndavies/2014/01/26/will-the-uk-be-the-first-to-tighten/" href="http://blogs.ft.com/gavyndavies/2014/01/26/will-the-uk-be-the-first-to-tighten/">Will the UK be the first to tighten? - Gavyn Davies</a></li>
</ul>
http://economistsview.blogspot.com/2014/01/links-for-01-27-2014.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-1610007851627057185Sun, 26 Jan 2014 18:03:00 +00002014-01-26T10:03:50.253-08:00EconomicsPolitics'Why There’s No Outcry'
<br />
Robert Reich tries to explain why "we don’t have a revolution in America":<br />
<a href="http://robertreich.org/post/74519195381">
</a><blockquote>
<a href="http://robertreich.org/post/74519195381">
Why There’s No Outcry, by Robert Reich</a>: People ask me all the time why
we don’t have a revolution in America, or at least a major wave of reform
similar to that of the Progressive Era or the New Deal or the Great Society.</blockquote>
<blockquote>
Middle incomes are sinking, the ranks of the poor are swelling, almost all
the economic gains are going to the top, and big money is corrupting our
democracy. So why isn’t there more of a ruckus?</blockquote>
<blockquote>
The answer is complex, but three reasons stand out.</blockquote>
<blockquote>
First, the working class is paralyzed with fear it will lose the jobs and
wages it already has. In earlier decades, the working class fomented reform.
... No longer... No one has any job security. ... Besides, their major means
of organizing themselves — labor unions — have been decimated. ...</blockquote>
<blockquote>
Second, students don’t dare rock the boat. In prior decades students were a
major force for social change. ... But today’s students don’t want to make a
ruckus. They’re laden with debt. ... To make matters worse, the job market
for new graduates remains lousy. Which is why record numbers are still
living at home.</blockquote>
<blockquote>
Reformers and revolutionaries don’t look forward to living with mom and dad
or worrying about credit ratings and job recommendations.</blockquote>
<blockquote>
Third and finally, the American public has become so cynical about
government that many no longer think reform is possible. ...</blockquote>
<blockquote>
Change is coming anyway. ... At some point, working people, students, and
the broad public will have had enough. They will reclaim our economy and our
democracy. This has been the central lesson of American history.</blockquote>
<blockquote>
Reform is less risky than revolution, but the longer we wait the more likely
it will be the latter.</blockquote>
Apparently,
<a href="http://economistsview.typepad.com/economistsview/2014/01/obama-and-the-one-percent.html">
Obama as "a little bit of FDR"</a> might not be enough.<br />
http://economistsview.blogspot.com/2014/01/why-theres-no-outcry.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-3833155616111027970Sun, 26 Jan 2014 17:14:00 +00002014-01-26T09:14:49.926-08:00Economics'Steve Rattner’s Manufacturing Muddle'Jared Bernstein:<br />
<blockquote>
<a data-mce-href="http://jaredbernsteinblog.com/steve-rattners-manufacturing-muddle/" href="http://jaredbernsteinblog.com/steve-rattners-manufacturing-muddle/"> Steve Rattner’s Manufacturing Muddle</a>: ...Steve Rattner makes some good points about the state of US manufacturing ... but the <a data-mce-href="http://www.nytimes.com/2014/01/26/opinion/sunday/rattner-the-myth-of-industrial-rebound.html?rref=opinion&amp;module=Ribbon&amp;version=origin&amp;region=Header&amp;action=click&amp;contentCollection=Opinion&amp;pgtype=article&amp;_r=0" href="http://www.nytimes.com/2014/01/26/opinion/sunday/rattner-the-myth-of-industrial-rebound.html?rref=opinion&amp;module=Ribbon&amp;version=origin&amp;region=Header&amp;action=click&amp;contentCollection=Opinion&amp;pgtype=article&amp;_r=0">argument</a> is confusing and unconvincing due to a pretty egregious omission. </blockquote>
<blockquote>
The
good points are generally about the weak wage trends ... though here’s
where the major omission comes in... If our manufacturing wages are so
low relative to both their past levels and some of our advanced economy
competitors (he mentions Germany), why are we not more globally
competitive in the sector? ... </blockquote>
<blockquote>
The key omission in Steve’s analysis is ... exchange rates. Dean Baker was <a data-mce-href="http://www.cepr.net/index.php/blogs/beat-the-press/steven-rattner-has-another-confused-piece-about-the-economy-in-the-nyt" href="http://www.cepr.net/index.php/blogs/beat-the-press/steven-rattner-has-another-confused-piece-about-the-economy-in-the-nyt">all over this</a>...<br />
<blockquote>
Rattner
never once mentions the value of the dollar. This happens to be huge.
[Data show]…that manufacturing employment first began to fall in the
late 1990s, even as the economy was booming, after the dollar soared due
to the botched bailout from the East Asian financial crisis. The run-up
in the dollar had the equivalent effect of placing a 30 percent tariff
on our exports and giving a 30 percent subsidy for imports. Under these
circumstances, it is hardly surprising that manufacturing employment
fell and the trade deficit soared.</blockquote>
...[I]t would be
foolish to pin one’s hope for a full employment recovery on any one
sector. ... The important question is: what distortionary factors are
holding the sector back from achieving its potential? More technically,
why does the US have both low growth in unit labor costs in <a data-mce-href="http://www.bls.gov/news.release/pdf/prod4.pdf" href="http://www.bls.gov/news.release/pdf/prod4.pdf">manufacturing</a>
(compensation relative to productivity growth) relative to our
competitors and persistent, large deficits in manufactured goods? ...<br />
In
this regard, it’s simply not credible to pontificate on manufacturing’s
decline without acknowledging the role of the dollar, exchange rate
manipulation, and our persistent trade deficits in manufactured goods.
...</blockquote>
http://economistsview.blogspot.com/2014/01/steve-rattners-manufacturing-muddle.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-6753439419353806382Sun, 26 Jan 2014 17:14:00 +00002014-01-26T09:14:38.315-08:00EconomicsIncome DistributionPolitics'Obama and the One Percent'Paul Krugman:<br />
<blockquote>
<a data-mce-href="http://krugman.blogs.nytimes.com/2014/01/26/obama-and-the-one-percent/" href="http://krugman.blogs.nytimes.com/2014/01/26/obama-and-the-one-percent/"> Obama and the One Percent</a>: Another week, another <a data-mce-href="http://online.wsj.com/news/articles/SB10001424052702304549504579316913982034286" href="http://online.wsj.com/news/articles/SB10001424052702304549504579316913982034286"> outburst by a one-percenter</a> comparing progressive taxation to Nazi atrocities. I particularly liked the end:<br />
<blockquote>
Kristallnacht was unthinkable in 1930; is its descendent “progressive” radicalism unthinkable now?</blockquote>
Because it’s just obvious that San Francisco progressives are the political heirs of fascism, right? </blockquote>
<blockquote>
You do wonder why the WSJ published this screed. ... </blockquote>
<blockquote>
Anyway,
thinking about this sort of thing makes me realize that there’s a
danger, especially for progressives, of confusing the proposition that
Obama’s billionaire haters are stark raving mad — which is true — with
the proposition that Obama has done nothing that hurts the plutocrats’
interests, which is false. Actually, Obama has been tougher on the one
percent than most progressives give him credit for. </blockquote>
<blockquote>
Start with taxes..., taxes on wealthy Americans have basically been <a data-mce-href="http://www.theatlantic.com/business/archive/2013/01/in-2013-the-top-1-will-pay-their-highest-total-tax-rate-since-1979/266764/" href="http://www.theatlantic.com/business/archive/2013/01/in-2013-the-top-1-will-pay-their-highest-total-tax-rate-since-1979/266764/"> rolled back to pre-Reagan levels</a> ... </blockquote>
<blockquote>
Meanwhile, financial reform looks as if it will have <a data-mce-href="http://www.newrepublic.com/article/116064/2013-financial-reform-went-way-better-anyone-expected" href="http://www.newrepublic.com/article/116064/2013-financial-reform-went-way-better-anyone-expected"> significantly more teeth</a> than expected. </blockquote>
<blockquote>
So
the one percent does have reason to be upset. No, Obama isn’t Hitler;
but he is turning out to be a little bit of FDR, after all.</blockquote>
http://economistsview.blogspot.com/2014/01/obama-and-one-percent.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-7957902469613282493Sun, 26 Jan 2014 08:03:00 +00002014-01-26T00:03:00.860-08:00EconomicsLinksLinks for 01-26-2014<ul>
<li><a data-mce-href="http://krugman.blogs.nytimes.com/2014/01/25/none-so-blind-macroeconomics-division/" href="http://krugman.blogs.nytimes.com/2014/01/25/none-so-blind-macroeconomics-division/">None So Blind, Macroeconomics Division - Paul Krugman</a></li>
<li><a data-mce-href="http://patrickminford.net/wp/E2013_14.pdf" href="http://patrickminford.net/wp/E2013_14.pdf">Price-level versus inflation targeting: a survey - Hatcher and Minford</a></li>
<li><a data-mce-href="http://angrybearblog.com/2014/01/is-the-permanent-income-glass-half-full-ii.html" href="http://angrybearblog.com/2014/01/is-the-permanent-income-glass-half-full-ii.html">Is the Permanent income glass half full - Angry Bear</a></li>
<li><a data-mce-href="http://www.nytimes.com/2014/01/26/opinion/sunday/rattner-the-myth-of-industrial-rebound.html?partner=rss&amp;emc=rss" href="http://www.nytimes.com/2014/01/26/opinion/sunday/rattner-the-myth-of-industrial-rebound.html?partner=rss&amp;emc=rss">The Myth of Industrial Rebound - NYTimes.com</a></li>
<li><a data-mce-href="http://noahpinionblog.blogspot.com/2014/01/chris-house-sticks-up-for-macro.html" href="http://noahpinionblog.blogspot.com/2014/01/chris-house-sticks-up-for-macro.html">Chris House sticks up for macro - Noahpinion</a></li>
<li><a data-mce-href="http://robertreich.org/post/74519195381" href="http://robertreich.org/post/74519195381">Why There's No Outcry - Robert Reich</a></li>
<li><a data-mce-href="http://www.voxeu.org/article/european-merger-policy-reform" href="http://www.voxeu.org/article/european-merger-policy-reform">European merger policy reform - vox</a></li>
<li><a data-mce-href="http://www.nytimes.com/2014/01/26/sunday-review/the-shopping-list-as-policy-tool.html?partner=rss&amp;emc=rss" href="http://www.nytimes.com/2014/01/26/sunday-review/the-shopping-list-as-policy-tool.html?partner=rss&amp;emc=rss">The Shopping List as Policy Tool - NYTimes.com</a></li>
<li><a data-mce-href="http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2014/01/abuses-of-statistics.html" href="http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2014/01/abuses-of-statistics.html">(Ab)uses of statistics - Stumbling and Mumbling</a></li>
<li><a data-mce-href="http://www.nytimes.com/2014/01/26/business/a-super-bowl-estimate-with-a-life-of-its-own.html?partner=rss&amp;emc=rss" href="http://www.nytimes.com/2014/01/26/business/a-super-bowl-estimate-with-a-life-of-its-own.html?partner=rss&amp;emc=rss">A Super Bowl Estimate With a Life of Its Own - NYTimes.com</a></li>
<li><a data-mce-href="http://econospeak.blogspot.com/2014/01/arithmetic-and-heritage-foundations.html" href="http://econospeak.blogspot.com/2014/01/arithmetic-and-heritage-foundations.html">Arithmetic and Heritage Foundation’s Chief Economist - EconoSpeak</a></li>
</ul>
http://economistsview.blogspot.com/2014/01/links-for-01-26-2014.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-7324298871660063788Sat, 25 Jan 2014 23:31:00 +00002014-01-25T15:31:44.394-08:00EconomicsIncome Distribution'We Can’t Afford to Leave Inequality to the Economists'Justin Fox on inequality:<br />
<blockquote>
<a data-mce-href="http://blogs.hbr.org/2014/01/we-cant-afford-to-leave-inequality-to-the-economists/" href="http://blogs.hbr.org/2014/01/we-cant-afford-to-leave-inequality-to-the-economists/">We Can’t Afford to Leave Inequality to the Economists, by Justin Fox</a>:
... Something really dramatic is going on up there in the top 5%, the
top 1%, the top 0.01%. But while economists know some things about the
impact of increasing overall income inequality, they still don’t know
all that much about what this 1% stuff means...&nbsp;</blockquote>
<blockquote>
It is one of the most dramatic economic developments of the past quarter century. And it <em>seems</em> like it might be bad thing. But conclusive economic evidence for its badness is hard to find. </blockquote>
<blockquote>
Yes, there are theories: All that wealth sloshing around in the top 1% <a data-mce-href="http://www.nytimes.com/2010/08/22/weekinreview/22story.html" href="http://www.nytimes.com/2010/08/22/weekinreview/22story.html">leads to more bubbles and crashes</a>. Extreme wealth <a data-mce-href="http://www.oxfam.org/sites/www.oxfam.org/files/bp-working-for-few-political-capture-economic-inequality-200114-summ-en.pdf" href="http://www.oxfam.org/sites/www.oxfam.org/files/bp-working-for-few-political-capture-economic-inequality-200114-summ-en.pdf">corrupts the political process</a>. Income inequality may be <a data-mce-href="http://conversableeconomist.blogspot.com/2011/09/how-does-inequality-affect-economic_29.html" href="http://conversableeconomist.blogspot.com/2011/09/how-does-inequality-affect-economic_29.html">slowing overall economic growth</a>.
And, as my colleague Walter Frick put it in an email when I brought
this up, “given the diminishing marginal utility of income, it’s hugely
wasteful for the super rich to have so much income.” </blockquote>
<blockquote>
I happen to believe there’s some truth to all four of those. But there are also lots of <a data-mce-href="http://www.nytimes.com/2014/01/17/opinion/brooks-the-inequality-problem.html" href="http://www.nytimes.com/2014/01/17/opinion/brooks-the-inequality-problem.html">counterarguments</a> and some <a data-mce-href="http://www.nber.org/papers/w17896" href="http://www.nber.org/papers/w17896">counterevidence</a>, and big economic studies like the new one by Chetty &amp; Co. don’t seem to be doing much to resolve the debate. </blockquote>
<blockquote>
Which
leads me to another theory: I think we’re eventually going to have to
figure out what if anything to do about exploding high-end incomes
without clear guidance from the economists. This is a discussion where
political and moral considerations may end up predominating. And as
Harvard’s Greg Mankiw made clear in his <a data-mce-href="http://www.aeaweb.org/articles.php?doi=10.1257/jep.27.3.21" href="http://www.aeaweb.org/articles.php?doi=10.1257/jep.27.3.21">maddeningly inconclusive <em>Journal of Economic Perspectives</em> essay on inequality</a> last summer, these are areas in which economists possess no comparative advantage.</blockquote>
http://economistsview.blogspot.com/2014/01/we-cant-afford-to-leave-inequality-to.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-5159321023997362129Sat, 25 Jan 2014 23:30:00 +00002014-01-25T15:30:19.124-08:00EconomicsMacroeconomicsMethodology'Is Macro Giving Economics a Bad Rap?'Chris House defends macro:<br />
<blockquote>
<a href="http://orderstatistic.wordpress.com/2014/01/25/is-macro-giving-economics-a-bad-rap/" target="_self"> Is Macro Giving Economics a Bad&nbsp;Rap?</a>: Noah Smith really has it in for macroeconomists. He has recently written an article in The Week in which he claims that macro is one of the weaker fields in economics... </blockquote>
<blockquote>
I think the opposite is true. Macro is one of the stronger fields, if not the strongest ... Macro is quite productive and overall quite healthy. There are several distinguishing features of macroeconomics which set it apart from many other areas in economics. In my assessment, along most of these dimensions, macro comes out looking quite good. </blockquote>
<blockquote>
First, macroeconomists are constantly comparing models to data. ... Holding theories up to the data is a scary and humiliating step but it is a necessary step if economic science is to make progress. Judged on this basis, macro is to be commended... </blockquote>
<blockquote>
Second, in macroeconomics, there is a constant push to quantify theories. That is, there is always an effort to attach meaningful parameter values to the models. You can have any theory you want but at the end of the day, you are interested not only in idea itself, but also in the magnitude of the effects. This is again one of the ways in which macro is quite unlike other fields. </blockquote>
<blockquote>
Third, when the models fail (and they always fail eventually), the response of macroeconomists isn’t to simply abandon the model, but rather they highlight the nature of the failure.&nbsp; ... </blockquote>
<blockquote>
Lastly, unlike many other fields, macroeconomists need to have a wide array of skills and familiarity with many sub-fields of economics. As a group, macroeconomists have knowledge of a wide range of analytical techniques, probably better knowledge of history, and greater familiarity and appreciation of economic institutions than the average economist. </blockquote>
<blockquote>
In his opening remarks, Noah concedes that macro is “the glamor division of econ”. He’s right. What he doesn’t tell you is that the glamour division is actually doing pretty well. ...</blockquote>
http://economistsview.blogspot.com/2014/01/is-macro-giving-economics-bad-rap.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-4089483534943929723Sat, 25 Jan 2014 23:28:00 +00002014-01-25T15:28:34.965-08:00EconomicsLinksLinks for 01-25-2014<ul>
<li><a data-mce-href="http://blogs.reuters.com/macroscope/2014/01/24/why-are-us-corporate-profits-so-high-because-wages-are-so-low/" href="http://blogs.reuters.com/macroscope/2014/01/24/why-are-us-corporate-profits-so-high-because-wages-are-so-low/">Why are US corporate profits so high? Because wages are so low - MacroScope</a></li>
<li><a data-mce-href="http://blogs.wsj.com/economics/2014/01/24/former-fed-economists-call-for-central-bank-to-scrap-fed-funds-rate-target/?mod=WSJBlog" href="http://blogs.wsj.com/economics/2014/01/24/former-fed-economists-call-for-central-bank-to-scrap-fed-funds-rate-target/?mod=WSJBlog">Should Central Banks Scrap Fed Funds Rate Target? - WSJ</a></li>
<li><a data-mce-href="http://www.voxeu.org/article/why-asian-firms-hold-cash" href="http://www.voxeu.org/article/why-asian-firms-hold-cash">Why Asian firms hold cash - vox</a></li>
<li><a data-mce-href="http://davegiles.blogspot.com/2014/01/testing-up-or-testing-down.html" href="http://davegiles.blogspot.com/2014/01/testing-up-or-testing-down.html">Testing Up, or Testing Down? - Dave Giles</a></li>
<li><a data-mce-href="http://www.cepr.net/index.php/op-eds-&amp;-columns/op-eds-&amp;-columns/greece-will-likely-begin-recovery-this-year-is-austerity-working" href="http://www.cepr.net/index.php/op-eds-&amp;-columns/op-eds-&amp;-columns/greece-will-likely-begin-recovery-this-year-is-austerity-working">Is Austerity Working in Greece? - CEPR</a></li>
<li><a data-mce-href="http://blogs.hbr.org/2014/01/we-cant-afford-to-leave-inequality-to-the-economists/" href="http://blogs.hbr.org/2014/01/we-cant-afford-to-leave-inequality-to-the-economists/">We Can't Afford to Leave Inequality to the Economists - Justin Fox</a></li>
<li><a data-mce-href="http://noahpinionblog.blogspot.com/2014/01/robert-barros-famous-polemic-against.html" href="http://noahpinionblog.blogspot.com/2014/01/robert-barros-famous-polemic-against.html">Robert Barro's famous polemic against New Keynesians - Noahpinion</a></li>
<li><a data-mce-href="http://conversableeconomist.blogspot.com/2014/01/us-household-finances-rebound.html" href="http://conversableeconomist.blogspot.com/2014/01/us-household-finances-rebound.html">U.S. Household Finances Rebound - Tim Taylor</a></li>
<li><a data-mce-href="http://www.voxeu.org/article/russia-against-eu-s-eastern-partnership" href="http://www.voxeu.org/article/russia-against-eu-s-eastern-partnership">Russia against EU’s Eastern Partnership - vox</a></li>
<li><a data-mce-href="http://mainlymacro.blogspot.com/2014/01/adapting-forward-guidance.html" href="http://mainlymacro.blogspot.com/2014/01/adapting-forward-guidance.html">Adapting forward guidance - mainly macro</a></li>
</ul>
http://economistsview.blogspot.com/2014/01/links-for-01-25-2014.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-2320312964496743251Fri, 24 Jan 2014 23:27:00 +00002014-01-25T15:27:48.811-08:00EconomicsIncome DistributionPaul Krugman: The Populist ImperativeJobs and inequality are "closely linked":<br />
<blockquote>
<a data-mce-href="http://www.nytimes.com/2014/01/24/opinion/krugman-the-populist-imperative.html" href="http://www.nytimes.com/2014/01/24/opinion/krugman-the-populist-imperative.html"> The Populist Imperative, by Paul Krugman, Commentary, NY Times</a>:
“The outstanding faults of the economic society in which we live are
its failure to provide for full employment and its arbitrary and
inequitable distribution of wealth and incomes.”</blockquote>
<blockquote>
John
Maynard Keynes wrote that in 1936, but it applies to our own time, too.
And, in a better world, our leaders would be doing all they could to
address both faults.</blockquote>
<blockquote>
Unfortunately,... we should
count ourselves lucky when leaders confront even one of our two great
economic failures. If ... President Obama devotes much of his State of
the Union address to inequality, everyone should be cheering him on.</blockquote>
<blockquote>
They
won’t, of course. Instead, he will face two kinds of sniping. The usual
suspects on the right will, as always when questions of income
distribution comes up, shriek “Class warfare!” But there will also be
seemingly more sober voices arguing that he has picked the wrong target,
that jobs, not inequality, should be at the top of his agenda.</blockquote>
<blockquote>
Here’s why they’re wrong.</blockquote>
<blockquote>
First of all, jobs and inequality are closely linked if not identical issues. ...</blockquote>
<blockquote>
Moreover,
there’s an even stronger case to be made that high unemployment — by
destroying workers’ bargaining power — has become <a data-mce-href="http://jaredbernsteinblog.com/inequality-ezra-and-paul-and-the-unifying-theory-and-evidence/" href="http://jaredbernsteinblog.com/inequality-ezra-and-paul-and-the-unifying-theory-and-evidence/"> a major source of rising inequality and stagnating incomes</a> even for those lucky enough to have jobs.</blockquote>
<blockquote>
Beyond that, as a political matter, inequality and macroeconomic policy are already inseparably linked. ... For example, <a data-mce-href="http://www.cbpp.org/cms/?fa=view&amp;id=3925" href="http://www.cbpp.org/cms/?fa=view&amp;id=3925">two-thirds of the spending cuts proposed last year by Representative Paul Ryan</a>, the chairman of the House Budget Committee, would have come at the expense of lower-income families.</blockquote>
<blockquote>
The
flip side of this attempt to use fiscal scare tactics to worsen
inequality is that highlighting concerns about inequality can translate
into pushback against job-destroying austerity, too.</blockquote>
<blockquote>
But
the most important reason for Mr. Obama to focus on inequality is
political realism. Like it or not, the simple fact is that Americans
“get” inequality; macroeconomics, not so much. ...</blockquote>
<blockquote>
The
point is that of the two great problems facing the U.S. economy,
inequality is the one on which Mr. Obama is most likely to connect with
voters. And he should seek that connection with a clear conscience:
There’s no shame is acknowledging political reality, as long as you’re
trying to do the right thing.</blockquote>
<blockquote>
So I hope we’ll
hear something about jobs Tuesday night, and some pushback against
deficit hysteria. But if we mainly hear about inequality and social
justice, that’s O.K.</blockquote>
http://economistsview.blogspot.com/2014/01/paul-krugman-populist-imperative.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-2960139616529094790Thu, 23 Jan 2014 23:26:00 +00002014-01-25T15:26:43.287-08:00EconomicsLinksLinks for 01-24-2014<ul>
<li><a data-mce-href="http://krugman.blogs.nytimes.com/2014/01/23/everything-new-is-old-again/?_php=true&amp;_type=blogs&amp;_r=0" href="http://krugman.blogs.nytimes.com/2014/01/23/everything-new-is-old-again/?_php=true&amp;_type=blogs&amp;_r=0">Everything New Is Old Again - Paul Krugman</a></li>
<li><a data-mce-href="http://www.willwilkinson.net/meditation/2014/01/23/old-school-blogging/" href="http://www.willwilkinson.net/meditation/2014/01/23/old-school-blogging/">Old School Blogging – Will Wilkinson</a></li>
<li><a data-mce-href="http://www.newrepublic.com/article/116318/wall-street-reform-dc-has-not-won-war-yet" href="http://www.newrepublic.com/article/116318/wall-street-reform-dc-has-not-won-war-yet">Wall Street Reform: D.C. Has Not Won the War Yet - Mike Konczal</a></li>
<li><a data-mce-href="http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/01/statistics-canadas-attention-deficit-disorder.html" href="http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/01/statistics-canadas-attention-deficit-disorder.html">Statistics Canada's Attention Deficit Disorder - Stephen Gordon</a></li>
<li><a data-mce-href="http://longandvariable.wordpress.com/2014/01/23/coping-with-segular-stagnation-by-raising-the-inflation-target-respose-to-kaminska-and-delong/" href="http://longandvariable.wordpress.com/2014/01/23/coping-with-segular-stagnation-by-raising-the-inflation-target-respose-to-kaminska-and-delong/">Coping with segular stagnation by raising the inflation target - longandvariable</a></li>
<li><a data-mce-href="http://noahpinionblog.blogspot.com/2014/01/a-henry-george-tax-for-san-francisco.html" href="http://noahpinionblog.blogspot.com/2014/01/a-henry-george-tax-for-san-francisco.html">A Henry George Tax for San Francisco - Noahpinion</a></li>
<li><a data-mce-href="http://twentycentparadigms.blogspot.com/2014/01/rodrik-on-our-science-ish-ness.html" href="http://twentycentparadigms.blogspot.com/2014/01/rodrik-on-our-science-ish-ness.html">Rodrik on Our Science-ish-ness - Twenty-Cent Paradigms</a></li>
<li><a data-mce-href="http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/01/another-weird-monetary-world.html" href="http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/01/another-weird-monetary-world.html">Another weird monetary world - Nick Rowe</a></li>
<li><a data-mce-href="http://economix.blogs.nytimes.com/2014/01/23/financial-reform-remains-a-work-in-progress/?partner=rss&amp;emc=rss" href="http://economix.blogs.nytimes.com/2014/01/23/financial-reform-remains-a-work-in-progress/?partner=rss&amp;emc=rss">Financial Reform Remains a Work in Progress - Simon Johnson</a></li>
<li><a data-mce-href="http://blog-imfdirect.imf.org/2014/01/23/finish-the-job-on-financial-regulation/" href="http://blog-imfdirect.imf.org/2014/01/23/finish-the-job-on-financial-regulation/">Finish the Job on Financial Regulation - The IMF Blog</a></li>
<li><a data-mce-href="http://www.calculatedriskblog.com/2014/01/weekly-initial-unemployment-claims-at_23.html" href="http://www.calculatedriskblog.com/2014/01/weekly-initial-unemployment-claims-at_23.html">Weekly Initial Unemployment Claims at 326,000 - Calculated Risk</a></li>
<li><a data-mce-href="http://www.ibtimes.co.uk/kenneth-rogoff-creating-eurozone-giant-historic-mistake-1433440" href="http://www.ibtimes.co.uk/kenneth-rogoff-creating-eurozone-giant-historic-mistake-1433440">Creating Eurozone 'Giant Historic Mistake' - Kenneth Rogoff</a></li>
<li><a data-mce-href="http://www.voxeu.org/article/efficient-retail-payments-and-growth-europe" href="http://www.voxeu.org/article/efficient-retail-payments-and-growth-europe">Efficient retail payments and growth in Europe - vox</a></li>
<li><a data-mce-href="http://understandingsociety.blogspot.com/2014/01/mechanisms-and-methodology.html" href="http://understandingsociety.blogspot.com/2014/01/mechanisms-and-methodology.html">Mechanisms and methodology - Understanding Society</a></li>
<li><a data-mce-href="http://krugman.blogs.nytimes.com/2014/01/23/heritage-still-hackish/" href="http://krugman.blogs.nytimes.com/2014/01/23/heritage-still-hackish/" target="_self">Heritage, Still Hackish - Paul Krugman</a></li>
<li><a data-mce-href="http://angrybearblog.com/2014/01/john-quiggin-is-as-usual-brilliant.html" href="http://angrybearblog.com/2014/01/john-quiggin-is-as-usual-brilliant.html">John Quiggin is, as usual, Brilliant - Angry Bear</a></li>
<li><a data-mce-href="http://www.foreignpolicy.com/articles/2014/01/23/aid_amnesia" href="http://www.foreignpolicy.com/articles/2014/01/23/aid_amnesia">Aid Amnesia - Bill Easterly</a></li>
</ul>
http://economistsview.blogspot.com/2014/01/links-for-01-24-2014.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-6920470282683466011Thu, 23 Jan 2014 23:25:00 +00002014-01-25T15:26:01.276-08:00EconometricsEconomics'On R-Squared and Economic Prediction'Jim Hamilton:<br />
<blockquote>
<a data-mce-href="http://www.econbrowser.com/archives/2014/01/on_rsquared_and.html" href="http://www.econbrowser.com/archives/2014/01/on_rsquared_and.html"> On R-squared and economic prediction</a>: Recently I've heard a number of otherwise intelligent people assess an economic hypothesis based on the R<sup>2</sup> of an estimated regression. I'd like to point out why that can often be very misleading. ...</blockquote>
<blockquote>
Here's what you'd find if you calculated a regression of this month's stock price (<em>p<sub>t</sub></em>) on last month's stock price (<em>p<sub>t-1</sub></em>). Standard errors of the regression coefficients are in parentheses.</blockquote>
<center>
<a class="asset-img-link" data-mce-href="http://economistsview.typepad.com/.a/6a00d83451b33869e201a511523cd1970c-popup" data-mce-style="display: inline;" href="http://economistsview.typepad.com/.a/6a00d83451b33869e201a511523cd1970c-popup" style="display: inline;"><img alt="Rsquared1" class="asset asset-image at-xid-6a00d83451b33869e201a511523cd1970c img-responsive" data-mce-src="http://economistsview.typepad.com/.a/6a00d83451b33869e201a511523cd1970c-500wi" data-mce-style="width: 480px;" src="http://economistsview.typepad.com/.a/6a00d83451b33869e201a511523cd1970c-500wi" style="width: 480px;" title="Rsquared1" /></a></center>
<blockquote>
The
adjusted R-squared for this relation is 0.997. ... On the other hand,
another way you could summarize the same relation is by using the change
in the stock price (Δ<em>p<sub>t</sub> = p<sub>t</sub></em> - <em>p<sub>t-1</sub></em>) as the left-hand variable in the regression:</blockquote>
<center>
<a class="asset-img-link" data-mce-href="http://economistsview.typepad.com/.a/6a00d83451b33869e201a3fca2d0e3970b-popup" data-mce-style="display: inline;" href="http://economistsview.typepad.com/.a/6a00d83451b33869e201a3fca2d0e3970b-popup" style="display: inline;"><img alt="Rsquared2" class="asset asset-image at-xid-6a00d83451b33869e201a3fca2d0e3970b img-responsive" data-mce-src="http://economistsview.typepad.com/.a/6a00d83451b33869e201a3fca2d0e3970b-500wi" data-mce-style="width: 480px;" src="http://economistsview.typepad.com/.a/6a00d83451b33869e201a3fca2d0e3970b-500wi" style="width: 480px;" title="Rsquared2" /></a></center>
<blockquote>
This
is in fact the identical model of stock prices as the first regression.
The standard errors of the regression coefficients are identical for
the two regressions, and the standard error of the estimate ... is
identical for the two regressions because indeed the residuals are
identical for every observation. ...</blockquote>
<blockquote>
Whatever
you do, don't say that the first model is good given its high R-squared
and the second model is bad given its low R-squared, because equations
(1) and (2) represent the identical model. ...</blockquote>
<blockquote>
That's
not a bad empirical description of stock prices-- nobody can really
predict them. ... This is actually a feature of a broad class of dynamic
economic models, which posit that ... the deviation between what
actually happens and what the decision-maker intended ... should be
impossible to predict if the decision-maker is behaving rationally. For
example, if everybody knew that a recession is coming 6 months down the
road, the Fed should be more expansionary today... The implication is
that when recessions do occur, they should catch the Fed and everyone
else by surprise.</blockquote>
<blockquote>
It's very helpful to look
critically at which magnitudes we can predict and which we can't, and at
whether that predictability or lack of predictability is consistent
with our economic understanding of what is going on. But if what you
think you learned in your statistics class was that you should always
judge how good a model is by looking at the R-squared of a regression,
then I hope that today you learned something new.</blockquote>
[There's an additional example and more explanation in the original post.]http://economistsview.blogspot.com/2014/01/on-r-squared-and-economic-prediction.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-4635236848898305437Thu, 23 Jan 2014 18:52:00 +00002014-01-23T10:52:55.352-08:00EconomicsIncome Distribution'A Response to Scott Winship’s Analysis of The Great Gatsby Curve'Sticking with today's apparent theme of inequality and mobility,
here's a rebuttal from Carter Price at the Washington Center for
Equitable Growth to a recent claim that there is no relationship between
inequality and mobility (also, on the "single motherhood" issue, see <a data-mce-href="http://www.interfluidity.com/v2/4938.html" href="http://www.interfluidity.com/v2/4938.html">here</a>):<br />
<blockquote>
<a data-mce-href="http://equitablegrowth.org/2014/01/23/1767/a-mathematical-response-to-scott-winships-analysis-of-the-great-gatsby-curve" href="http://equitablegrowth.org/2014/01/23/1767/a-mathematical-response-to-scott-winships-analysis-of-the-great-gatsby-curve">
A Mathematical Response to Scott Winship’s Analysis of The Great Gatsby
Curve, by Carter Price, Washington Center for Equitable Growth</a>: While we know today’s big inequality and mobility news is Raj Chetty, Emmanuel Saez, and others’ <a data-mce-href="http://www.equality-of-opportunity.org/" href="http://www.equality-of-opportunity.org/">new paper</a>
on variance in mobility over time — which we’ll be discussing shortly —
we wanted to take a moment to look at the math behind some analysis
derived from some of the previous data they have collected from their <a data-mce-href="http://www.equality-of-opportunity.org/index.php/data" href="http://www.equality-of-opportunity.org/index.php/data">Equality of Opportunity Project</a> on variance in mobility over geography.</blockquote>
<blockquote>
The “Great Gatsby Curve,” a term coined by Princeton economist <a data-mce-href="http://www.americanprogress.org/events/2012/01/pdf/krueger.pdf" href="http://www.americanprogress.org/events/2012/01/pdf/krueger.pdf"> Alan Krueger</a> based on the work of Ottawa economist <a data-mce-href="http://milescorak.files.wordpress.com/2012/01/inequality-from-generation-to-generation-the-united-states-in-comparison-v3.pdf" href="http://milescorak.files.wordpress.com/2012/01/inequality-from-generation-to-generation-the-united-states-in-comparison-v3.pdf"> Miles Corak</a>,
shows that across developed countries, higher economic inequality is
associated with lower mobility. This curve has sparked a great deal of
debate particularly because the United States stands apart among the
developed nations for its high inequality and low mobility.</blockquote>
<blockquote>
In a recent foray into this debate, Manhattan Institute sociologist <a data-mce-href="http://economics21.org/commentary/great-gastby-curve-revisited-part-1" href="http://economics21.org/commentary/great-gastby-curve-revisited-part-1"> Scott Winship</a>
and Heritage Foundation research assistant Donald Schneider use data
from the Equality of Opportunity Project to look at the relationship
between inequality and mobility across U.S. “commuting zones,” which are
groups of counties that form a common labor market. (The Equality of
Opportunity Project assessed economic mobility by looking at the 2011-12
incomes of people born in 1980-82 and their parents’ incomes from
1996-2000.) Winship and Schneider conclude that this new data indicate
that mobility is actually largely unrelated to economic inequality and
that the core reason for low economic mobility is single motherhood.</blockquote>
<blockquote>
I’ve
reproduced their findings, but I don’t come to the same conclusions.
Winship and Schneider don’t weight the data properly and ignore too much
of the data. Thus, I do not conclude that they provide compelling
arguments to ignore economic inequality when discussing economic
mobility....<br /><br />While analysis of multiple measures of inequality
and multiple measures of mobility suggest that economic inequality is
negatively associated with economic mobility, much more analysis needs
to be done to fully understand these complex relationships. In
particular, the mechanisms that drive these relationships should be
understood. I hope that this dispels some of the faulty analysis and
encourages more rigorous analysis of these data.</blockquote>
[See the article for regressions, graphs, and analysis supporting the conclusions.]http://economistsview.blogspot.com/2014/01/a-response-to-scott-winships-analysis.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-6282773628477185390Thu, 23 Jan 2014 18:51:00 +00002014-01-23T10:51:43.388-08:00EconomicsIncome DistributionPoliticsTechnologyUnionsDon't Blame the Robots for our Wage or Job ProblemsI'm a bit more sympathetic to the skill based technical change
causing wage inequality arguments than Larry Mishel, technological
change is at least part of the story in my view (but, importantly, not
the whole story, unionization and relative bargaining power between
workers and firms, political forces, etc. are also at work), but his
arguments are certainly worth noting (and this extract may not fully
reflect his views):<br />
<blockquote>
<a data-mce-href="http://www.epi.org/blog/robots-coming-blame-wage-job-problems/" href="http://www.epi.org/blog/robots-coming-blame-wage-job-problems/">The Robots Are Here and More Are Coming: Do Not Blame Them for our Wage or Job Problems, , by Lawrence Mishel</a>:
The “robots are coming” narrative dominating discussions of the
economy&nbsp; was popularized by Erik Brynjolfsson and Andrew McAfee in their
2011 book, <a data-mce-href="http://books.wwnorton.com/books/The-Second-Machine-Age/" href="http://books.wwnorton.com/books/The-Second-Machine-Age/"><em>Race Against the Machine</em></a>. They have built on that theme in the richer, deeper <em>The Second Machine Age </em>(W.W. Norton, 2014)<em>. </em>The
first half of the book provides a valuable window, at least for a
non-technologist like me, into past developments and the future
trajectory of digitization. Their claim is that digitization will do for
mental power what the steam engine did for muscle power—that is, quite a
bit, transforming our lives at work and play.</blockquote>
<blockquote>
The
remainder of the book dwells on the role of digitization in generating
both bounty (more consumer choice and greater output, wealth, and
income) and spread (greater inequalities of wages, income, and wealth).
In treating these topics, they heavily rely on the work of others. As in
their last book, they do not provide much direct evidence of the
connection between technological change and wage inequality. I study
these issues and believe they are wrong to tightly link digitization and
robots to wage inequality and the slow job growth of the 2000s.
Although the authors claim “technology is certainly not the only force
causing this rise in spreads, but it is one of the main ones” my fear is
that this book, like their last one, will fuel the mistaken narrative
that technology is responsible for our job and wage problems and that we
are powerless to obtain more equitable growth. ...</blockquote>
<blockquote>
On
wage inequality, the authors offer “skill-biased technical change” or
SBTC as the explanation. In fact, they offer two distinct SBTC
narratives, both of which cannot be simultaneously true and neither of
which aptly explains wage trends.</blockquote>
<blockquote>
In general,
SBTC narratives are weak because they cannot explain one of the key
inequality trends, the remarkable wage and income growth of the top 1.0
and 0.1 percent. ...</blockquote>
<blockquote>
Specifically, the authors’
first SBTC narrative, the “race between technology and skills,” falls
short because it doesn’t square with recent trends. Under this
narrative, technological change makes employers value education more,
and the more education or skills one has, the better one fares. Despite
the absence of prima facie evidence for this popular narrative for two
decades, it barrels along anyway. For instance, the wage gap between
middle and low-wage workers has been stable or falling since 1987 or so,
meaning that those with the least skills have done at least as well or
better than those in the middle. ...</blockquote>
<blockquote>
The second
narrative is that technology is eroding jobs and wages in middle-wage
occupations but expanding opportunities and wages among low- and
high-wage occupations. This “job polarization” narrative, which emerged
around 2006, was designed to overcome the flaw in the education
narrative’s explanation of wage trends in the 1990s, when low-wage
workers fared as well or better than middle-wage workers. The
accumulating evidence now shows that <a data-mce-href="http://www.epi.org/publication/technology-inequality-dont-blame-the-robots/" href="http://www.epi.org/publication/technology-inequality-dont-blame-the-robots/">job polarization has not occurred in the entire 2000s</a>...</blockquote>
<blockquote>
So,
again, these two SBTC narratives can’t both be true—either middle-wage
workers are doing better than low-wage workers or they’re not. And
neither one can explain the trends of the 2000s, the period where one
would expect digitization’s impact to be most evident. The robots are
here and more will be coming but they are not responsible for our
employment or our wage problems. Read the first half of the book to
learn about technology but take the second half with a grain of salt.
For understanding wage inequality <a data-mce-href="http://stateofworkingamerica.org/" href="http://stateofworkingamerica.org/">you should look elsewhere</a>.</blockquote>
http://economistsview.blogspot.com/2014/01/dont-blame-robots-for-our-wage-or-job.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-7883644284465316418Thu, 23 Jan 2014 18:49:00 +00002014-01-23T10:49:18.730-08:00EconomicsIncome DistributionIncome MobilityThe topic of the day seems to be the new study on income mobility:<br />
<ul>
<li><a data-mce-href="http://www.nytimes.com/2014/01/23/business/upward-mobility-has-not-declined-study-says.html?partner=rss&amp;emc=rss&amp;_r=0" href="http://www.nytimes.com/2014/01/23/business/upward-mobility-has-not-declined-study-says.html?partner=rss&amp;emc=rss&amp;_r=0"> Upward Mobility Has Not Declined, Study Says - NYTimes.com</a></li>
<li><a data-mce-href="http://jaredbernsteinblog.com/stable-income-mobility-not-a-muddle-at-all/" href="http://jaredbernsteinblog.com/stable-income-mobility-not-a-muddle-at-all/"> Stable Income Mobility: Not a Muddle At All - Jared Bernstein</a></li>
<li><a data-mce-href="http://www.cepr.net/index.php/blogs/beat-the-press/did-we-need-a-landmark-study-to-tell-us-mobility-didnt-decrease-for-people-entering-the-labor-market-between-1990-and-2007" href="http://www.cepr.net/index.php/blogs/beat-the-press/did-we-need-a-landmark-study-to-tell-us-mobility-didnt-decrease-for-people-entering-the-labor-market-between-1990-and-2007"> Did We Need a Landmark Study to Tell Us Mobility Didn't Decrease Between 1990 and 2007? - Dean Baker</a></li>
<li><a data-mce-href="http://marginalrevolution.com/marginalrevolution/2014/01/upward-mobility-in-the-united-states-is-not-declining-as-many-citizens-think.html" href="http://marginalrevolution.com/marginalrevolution/2014/01/upward-mobility-in-the-united-states-is-not-declining-as-many-citizens-think.html"> Upward mobility in the United States is not declining as many citizens think - Tyler Cowen</a></li>
<li><a data-mce-href="http://www.slate.com/blogs/moneybox/2014/01/23/gregory_clark_on_social_mobility_in_sweden.html" href="http://www.slate.com/blogs/moneybox/2014/01/23/gregory_clark_on_social_mobility_in_sweden.html"> What If Social Mobility Is Never High Anywhere? - Matthew Yglesias </a></li>
</ul>
My
take is similar to Kevin Drum's, who manages to separate the level of
mobility (very low) to the rate of change (one study, the latest, says
mobility is unchanged):<br />
<ul>
<li><a data-mce-href="http://www.motherjones.com/kevin-drum/2014/01/income-mobility-us-terrible-least-its-not-getting-worse" href="http://www.motherjones.com/kevin-drum/2014/01/income-mobility-us-terrible-least-its-not-getting-worse"> Income Mobility in the US is Terrible, But at Least It's Not Getting Worse - Kevin Drum</a></li>
</ul>
This response emphasizes the geographic variation -- where you are born appears to matter quite a bit:<br />
<ul>
<li><a data-mce-href="http://equitablegrowth.org/2014/01/23/1770/heres-to-wishing-you-the-best-of-luck-in-the-birth-lottery-youre-going-to-need-it" href="http://equitablegrowth.org/2014/01/23/1770/heres-to-wishing-you-the-best-of-luck-in-the-birth-lottery-youre-going-to-need-it"> Here’s to wishing you the best of luck in the birth lottery—you’re going to need it - Heather Boushey</a></li>
</ul>
http://economistsview.blogspot.com/2014/01/income-mobility.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-2403360689327009758Thu, 23 Jan 2014 08:03:00 +00002014-01-23T00:03:00.264-08:00EconomicsLinksLinks for 01-23-2014<ul>
<li><a data-mce-href="http://arindube.com/2014/01/22/casual-versus-causal-inference-time-series-edition/" href="http://arindube.com/2014/01/22/casual-versus-causal-inference-time-series-edition/">Casual versus Causal Inference: Time series edition - Arin Dube</a></li>
<li><a data-mce-href="http://www.epi.org/blog/robots-coming-blame-wage-job-problems/" href="http://www.epi.org/blog/robots-coming-blame-wage-job-problems/">Don't Blam the Robots - Larry Mishel</a></li>
<li><a data-mce-href="http://johnquiggin.com/2014/01/23/new-old-keynesianism-crosspost-from-crooked-timber/" href="http://johnquiggin.com/2014/01/23/new-old-keynesianism-crosspost-from-crooked-timber/">New Old Keynesianism - John Quiggin</a></li>
<li><a data-mce-href="http://www.cepr.net/index.php/blogs/beat-the-press/when-someone-says-paul-krugman-called-for-greenspan-to-create-a-housing-bubble-back-in-2002-they-are-trying-to-say-that-they-are-either-a-fool-or-a-liar" href="http://www.cepr.net/index.php/blogs/beat-the-press/when-someone-says-paul-krugman-called-for-greenspan-to-create-a-housing-bubble-back-in-2002-they-are-trying-to-say-that-they-are-either-a-fool-or-a-liar">Either a Fool or a Liar - Dean Baker</a></li>
<li><a data-mce-href="http://www.voxeu.org/article/simple-formula-climate-linked-economic-damage" href="http://www.voxeu.org/article/simple-formula-climate-linked-economic-damage">A simple formula for climate-linked economic damage - vox</a></li>
<li><a data-mce-href="http://delong.typepad.com/sdj/2014/01/ceasefire-oregon-fundraiser-push-universal-background-checks-across-the-line-in-oregon.html" href="http://delong.typepad.com/sdj/2014/01/ceasefire-oregon-fundraiser-push-universal-background-checks-across-the-line-in-oregon.html">Ceasefire Oregon Fundraiser - Brad DeLong</a></li>
<li><a data-mce-href="http://www.economicprincipals.com/issues/2014.01.23/1570.html" href="http://www.economicprincipals.com/issues/2014.01.23/1570.html">A Hundred Years Later: How Are We Doing? - David Warsh</a></li>
<li><a data-mce-href="http://krugman.blogs.nytimes.com/2014/01/22/the-euthanasia-of-the-rentier/" href="http://krugman.blogs.nytimes.com/2014/01/22/the-euthanasia-of-the-rentier/">The Euthanasia of the Rentier - Paul Krugman</a></li>
<li><a data-mce-href="http://www.interfluidity.com/v2/4938.html" href="http://www.interfluidity.com/v2/4938.html">“Marriage promotion” is a destructive cargo cult - interfluidity</a></li>
<li><a data-mce-href="http://mainlymacro.blogspot.com/2014/01/ordoliberalism-neoliberalism-and.html" href="http://mainlymacro.blogspot.com/2014/01/ordoliberalism-neoliberalism-and.html">Ordoliberalism, Neoliberalism and Economics - mainly macro</a></li>
<li><a data-mce-href="http://uneasymoney.com/2014/01/22/g-l-s-shackle-and-the-indeterminacy-of-economics/" href="http://uneasymoney.com/2014/01/22/g-l-s-shackle-and-the-indeterminacy-of-economics/">G. L. S. Shackle and the Indeterminacy of Economics - Uneasy Money</a></li>
<li><a data-mce-href="http://carolabinder.blogspot.com/2014/01/lance-davis-1928-2014.html" href="http://carolabinder.blogspot.com/2014/01/lance-davis-1928-2014.html">Lance Davis (1928-2014) - Carola Binder</a></li>
<li><a data-mce-href="http://krugman.blogs.nytimes.com/2014/01/22/conservatives-and-the-cbo/" href="http://krugman.blogs.nytimes.com/2014/01/22/conservatives-and-the-cbo/">Conservatives and the CBO - Paul Krugman</a></li>
<li><a data-mce-href="http://www.nytimes.com/2014/01/22/business/states-cutting-weeks-of-aid-to-the-jobless.html?_r=1" href="http://www.nytimes.com/2014/01/22/business/states-cutting-weeks-of-aid-to-the-jobless.html?_r=1">States Cutting Weeks of Aid to the Jobless - NYTimes.com</a></li>
<li><a data-mce-href="http://online.wsj.com/news/articles/SB10001424052702304419104579324593432465048" href="http://online.wsj.com/news/articles/SB10001424052702304419104579324593432465048">Two-Track Future Imperils Global Growth - WSJ.com</a></li>
<li><a data-mce-href="http://blogs.wsj.com/economics/2014/01/22/strange-brew-long-term-unemployment-and-the-beveridge-curve/?mod=WSJBlog" href="http://blogs.wsj.com/economics/2014/01/22/strange-brew-long-term-unemployment-and-the-beveridge-curve/?mod=WSJBlog">Long-Term Unemployment and the Beveridge Curve - WSJ</a></li>
<li><a data-mce-href="http://www.eurekalert.org/pub_releases/2014-01/uonh-ci3012214.php" href="http://www.eurekalert.org/pub_releases/2014-01/uonh-ci3012214.php">39% of unemployed are seeking work for 6+ months - EurekAlert</a></li>
<li><a data-mce-href="http://www.washingtonpost.com/opinions/david-ignatius-an-emerging-market-problem/2014/01/22/173a984c-82f3-11e3-bbe5-6a2a3141e3a9_story.html?wprss=rss_opinions" href="http://www.washingtonpost.com/opinions/david-ignatius-an-emerging-market-problem/2014/01/22/173a984c-82f3-11e3-bbe5-6a2a3141e3a9_story.html?wprss=rss_opinions">An emerging market problem - David Ignatius</a></li>
<li><a data-mce-href="http://longandvariable.wordpress.com/2014/01/22/at-the-zlb-reducing-unemployment-benefits-increases-total-unemployment-and-reduces-friction-unemployment/" href="http://longandvariable.wordpress.com/2014/01/22/at-the-zlb-reducing-unemployment-benefits-increases-total-unemployment-and-reduces-friction-unemployment/">At the ZLB... - longandvariable</a></li>
<li><a data-mce-href="http://kparkplace.tumblr.com/post/74188638438/adam-smith-and-inequality" href="http://kparkplace.tumblr.com/post/74188638438/adam-smith-and-inequality">Adam Smith and Inequality - Park Place</a></li>
<li><a data-mce-href="http://web.mit.edu/newsoffice/2014/mobile-money-helps-kenyans-weather-financial-storms-0122.html" href="http://web.mit.edu/newsoffice/2014/mobile-money-helps-kenyans-weather-financial-storms-0122.html">Mobile money helps Kenyans weather financial storms - MIT News</a></li>
<li><a data-mce-href="http://chrisblattman.com/2014/01/22/what-we-talk-about-when-we-talk-about-corruption/" href="http://chrisblattman.com/2014/01/22/what-we-talk-about-when-we-talk-about-corruption/">What we talk about when we talk about corruption - Chris Blattman</a></li>
</ul>
http://economistsview.blogspot.com/2014/01/links-for-01-23-2014.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-756715080706414439Wed, 22 Jan 2014 18:47:00 +00002014-01-22T10:47:55.041-08:00EconomicsIncome DistributionMarket FailureSocial Insurance'The Political Economy of Populism'Paul Krugman:<br />
<blockquote>
<a data-mce-href="http://krugman.blogs.nytimes.com/2014/01/22/a-note-on-the-political-economy-of-populism/" href="http://krugman.blogs.nytimes.com/2014/01/22/a-note-on-the-political-economy-of-populism/"> A Note on the Political Economy of Populism</a>:
All indications are that President Obama will make inequality the
central theme of his State of the Union address. Assuming he does, he
will face two different kinds of sniping. One will come from the usual
suspects on the right, shrieking “class warfare”. The other will come
from a variety of people, some of them well-intentioned, arguing that
while sure, inequality is an issue, the crucial thing now is to get the
economy growing and create more jobs; these people will argue that
populism is a diversion from the main issue.</blockquote>
<blockquote>
Here’s why they’re wrong.</blockquote>
<blockquote>
First of all, even on the straight economics inequality and job creation aren’t completely separable issues. ...</blockquote>
<blockquote>
Beyond that, there’s the political economy.</blockquote>
<blockquote>
It
has been painfully obvious, to anyone willing to see (a group that
unfortunately doesn’t include a large part of the press corps) that
deficit obsession hasn’t really been about deficits — it has been about
using deficits as a club with which to smash to welfare state, and hence
increase inequality. ...</blockquote>
<blockquote>
Conversely, talking
about the need to help struggling families is ... a way to shift the
focus away from deficit obsession, and pave the way at least for a
relaxation of austerity, if not actual stimulus.</blockquote>
<blockquote>
And
I think we also have to face up to an awkward political reality:
moderate populism has a broad popular constituency, Keynesian
macroeconomics doesn’t..., the public doesn’t “get” macroeconomics;
lines like “American families are having to tighten their belts, so the
government should too” still resonate. You could blame Obama for not
using the bully pulpit to teach the nation why this is wrong, and I wish
he had made more of a stand. Still, the fact is that this is just a
hard story to get across...</blockquote>
<blockquote>
So if I were Obama,
I’d do what he’s apparently doing: focus on inequality, which is a valid
and popular issue, and use it indirectly to move macro policy in the
right direction too.</blockquote>
To follow up on the <a data-mce-href="http://economistsview.typepad.com/economistsview/2014/01/inequality-in-adam-smiths-world.html" href="http://economistsview.typepad.com/economistsview/2014/01/inequality-in-adam-smiths-world.html" target="_self">previous post</a>,
capitalism is the best economic system yet discovered for producing
economic growth, but it also concentrates risk and causes people to face
hardship through no fault of their own (e.g. a recession that puts
someone out of work, someone who shows up for work everyday and does
their job well). <a data-mce-href="http://economistsview.typepad.com/economistsview/2005/04/_the_need_for_s.html" href="http://economistsview.typepad.com/economistsview/2005/04/_the_need_for_s.html" target="_self">The solution to this</a>
is for either the private sector or the government to provide insurance
against these risks -- and market failures mean it is generally the
government that must step in. Yes, that means transfers from the winners
to the less fortunate, much as those with fire insurance who have good
outcomes -- no fire -- find their insurance premiums transferred to
those who do have the bad luck to experience a fire. But the risks
inherent in the system that makes those at the top so wealthy, and those
at the bottom so miserable must be attenuated through government
provided insurance. Unemployment insurance is a good example of this,
but more social insurance is needed to protect the vulnerable from risks
they had no hand in creating (e.g. the financial crisis caused great
pain for workers who had nothing at all to do with creating the problems
that caused the Great Recession, while those who benefitted from the
lead up to the crisis and had a hand in causing it, those who are doing
very well now, whine incessantly if they are asked to help to reduce the
hardship of the innocent).http://economistsview.blogspot.com/2014/01/the-political-economy-of-populism.htmlnoreply@blogger.com (Mark Thoma)0tag:blogger.com,1999:blog-11255170.post-4716511344807056489Wed, 22 Jan 2014 17:59:00 +00002014-01-22T09:59:37.626-08:00EconomicsIncome DistributionMarket Failure'Inequality in Adam Smith’s World'I like this as far as it goes, but why not make the point that there
is a role for government in solving the market failures that lead to the
lack of job insurance for vulnerable workers (and *perhaps* for solving
the inequality problem as well if it progresses beyond some
threshold)?:<br />
<blockquote>
<a data-mce-href="http://orderstatistic.wordpress.com/2014/01/22/inequality-in-adam-smiths-world/" href="http://orderstatistic.wordpress.com/2014/01/22/inequality-in-adam-smiths-world/"> Inequality in Adam Smith’s World, by Chris House</a>: Inequality is a fact of economic life and it is becoming more and more pronounced over time. ...</blockquote>
<blockquote>
There
are many forces in our economy that create income inequality. The most
basic of these forces however, is tied to the nature of trade itself and
can be traced all the way back to Adam Smith and the division of labor.
If you read the Wealth of Nations (<a data-mce-href="http://orderstatistic.wordpress.com/2014/01/11/is-the-general-theory-worth-reading-today/" href="http://orderstatistic.wordpress.com/2014/01/11/is-the-general-theory-worth-reading-today/">something I told you not to do a few blog posts back …</a>)
you will find that Smith begins by marveling at the incredible
increases in productivity that can be obtained by exploiting the
division of labor, that is, by specializing. ... A jack-of-all-trades is
simply not valued in a market system. ...</blockquote>
<blockquote>
The
way you get the division of labor to work is by combining it with trade.
... A physician cannot consume only her own medical advice – she must
draw on the productivity of the many other specialists in society. If
you are willing to do trade, you can, by specializing, reach incredible
levels of productivity. As populations grow, and as the ability to trade
grows, you should see more and more specialization and higher and
higher productivity. (Obviously the division of labor is not the only
source of increases in productivity.)</blockquote>
<blockquote>
However,
there is a downside... Adam Smith’s plan exposes people to incredible
variations in income and thus a market system possesses and important
force which causes inequality. Specialization ties your entire wellbeing
to a single industry. If you decide that you are going to become a web
designer, your fate is very closely tied to the market for web
designers. As a result, while Smith’s plan dramatically increases
overall productivity, it also exposes us to incredible risk.</blockquote>
<blockquote>
Of
course, markets do have responses to risk. The typical response is for
the market to provide insurance contracts to reduce risk. In this case
however, the type of insurance needed is actually income or job
insurance. These types of insurance contracts are not typically
available. ...</blockquote>
<blockquote>
I don’t mean to imply that all or
even most of the alarming increase in inequality is due to the division
of labor and trade. I would guess that modern technology (which allows
people to leverage luck to extreme degrees by cheaply reproducing and
transmitting ideas and information) and inheritance, both play a
significant role in creating inequality. However, living with income
inequality is an implicit part of the deal we made with Adam Smith and
it will be with us in some form for a long time.</blockquote>
http://economistsview.blogspot.com/2014/01/inequality-in-adam-smiths-world.htmlnoreply@blogger.com (Mark Thoma)0